In our last issue we described how Indonesia, and especially Kalimantan's gold belt has become a honeypot for Canadian companies. They are hoping to strike gold in a big way, like Bre-X Minerals Ltd, which has discovered a massive deposit now estimated to contain some 40 million ounces of gold. Busang ranks alongside other mega-mines like Freeport/RTZ's Grasberg world-beating deposit which has proven reserves of 50 million ounces. It throws RTZ's nearby Kelian mine of 5 million ounces into the shade. According to the Far Eastern Economic Review, the mine at Busang is likely to be a low-cost, open-pit operation with a tributary of the Mahakam River and existing logging roads serving as supply lines. The area comprises three concession lying over logged over foothills, it reports.
The previous gold rush in Kalimantan was dominated by Australian companies, (an Australian company Montague Gold actually explored Busang in the mid-1980s) but this time, as the list below shows, it is the Canadians who are hoping to divide between them the spoils to be found beneath Kalimantan's forests. (Far Eastern Economic Review 21/3/96)
State-owned companies go for gold
Joining in the gold rush are two of Indonesia's state-owned mining companies, PT Tambang Timah and PT Aneka Tambang. In February they announced a cooperation agreement to explore for gold and diamonds in Aneka Tambang's concessions. Tambang Timah, one of the world's largest tin miners will provide finance and manpower. It has been granted exploration rights for gold in Natal, North Sumatra and is conducting preliminary surveys in three areas of Kalimantan. (Jakarta Post 12/2/96)
Canada: big pals with Indonesia
When Canadian Prime Minister Jean Chretien visited Jakarta in January, yet more business deals were clinched with Indonesia, underlining his country's growing involvement in the Indonesian economy. Canadian mining companies like Inco, Ingold and Placer Dome have long been active in Indonesia, and Kalimantan's latest gold rush has brought in a flurry of new investors from Canada.
Indonesia is already Canada's most important export market in Southeast Asia, with two-way trade exceeding C$1.1 billion in 1995.
New deals clinched in January this year include an C$ 800 million investment in gas by Asamera Overseas Ltd. and five-year wheat contract between Canada's Wheat Board and Indofood, a large Jakarta food-processor. (Southam News 25/1/96)
Canada is also hoping to win the contract to build Indonesia's first nuclear power plant.
Island to be mined to oblivion?
Despite protests from 22 NGOs, the head of Kotabaru district, South Kalimantan is standing by his decision to allow mining on the island of Sebuku. Sebuku lies next to the far bigger Laut Island which houses a recently-constructed coal export terminal. According to the NGOs, grouped under the local chapter of the Indonesian Environmental Forum, WALHI, the 27,000-hectare island will disappear from the map in ten years' time if it is mined continuously. The island, which has a population of 4,320, will end up below sea level, according to a month-long study conducted by the organisations. The NGOs have written to the ministers for mines, forestry, environment and public works as well as the Indonesian Institute of Sciences (LIPI) urging them not to issue a licence to the company. The island is part of the Teluk Kelumpang nature reserve. Currently the company involved, PT Bahari Cakrawala Sebuku, only holds an exploration licence.
District head MBA Bektam dismisses the NGOs' fears, saying mining will be done at the centre of the island, not on coastal areas. He says plans have already been drawn up to rehabilitate mined areas, by converting them into irrigated rice-fields for the local people who currently make their living by fishing. (Jawa Pos 29/1/96)
Coal damage
The neglect of mined areas and the damaging of roads by heavy coal trucks is disadvantaging the local community in coal mining areas of Banjar and Tapin, South Kalimantan. The vice-governor of the province, Bachtiar Murad has called on the Director General of Mines to come and see for himself the damage that has been done. He has also threatened to resign if nothing is done to improve the situation. He accused state-owned company PT Bukit Asam of totally ignoring mining regulations. PT Bukit Asam has a cooperation agreement with Taiwanese company Chung Hua in this region.
In the past year 84 people have been killed in mining truck accidents. (Jawa Pos 29/1/96)
Coal expansion
It is not surprising that the negative impacts of coal mining are causing concern, given the massive expansion of the industry in recent years. Coal production has almost tripled in the nineties, from 10.6 million tonnes in 1990 to around 32 Mt in 1994. Most of it comes from the east coast of Kalimantan and several areas in Sumatra. The largest producer is PT Kaltim Prima, owned by CRA (50%) and BP (50%), exporting to Europe, Japan and Hawaii. Indonesia is now the world's third largest producer after Australia and South Africa, and has enough deposits to meet domestic needs for the next 100-200 years. This fact is used by some in the argument against the need for nuclear power.
Coal's use in Indonesia is currently far less widespread than oil, however, which accounts for more than half the country's energy consumption. Natural gas accounts for a quarter, while coal accounts for only 8.8% of energy consumed (1994 figures). The government's energy diversification policy aims to increase coal consumption to 50% of domestic demand and to reduce oil to 30%, thereby saving more for export.
On top of PT Bukit Asam's operations, there are nine contractors operating large mines in Indonesia:
PT Kaltim Prima: (BP, CRA) E. Kalimantan
PT Arutmin: BHP-Utah) S. Kalimantan
PT Adaro: (Spanish govt, New Hope Corp.) S. Kalimantan
PT Kideco Jaya Agung: (Korea Indonesia Development Company) E. Kalimantan
PT Multi Harapan: (New Hope Corp.) East Kalimantan
PT Tanito Harum: (domestic) E.Kalimantan
PT Allied Indo: (Allied Indonesia Coalfields)
PT Kendilo Coal: BHP-Utah, E. Kalimantan, Mitsui Corp.
PT Berau Coal: (Nissho Iwai Corp.) East Kalimantan
Coal production by Indonesian companies is likely to increase in the future. In August 1994, 19 domestic coal contractors signed cooperation contracts with the government. (Mining Magazine, July 1995)